Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

These rules are administered by the Real Estate Agents Authority.

Pursuant to section 14 of the Real Estate Agents Act 2008, the Real Estate Agents Authority, with the approval of the Minister of Justice given in accordance with section 17 of that Act, and after consultation in accordance with section 16 of that Act, makes the following rules.

Rules

1Title

2Commencement

These rules come into force on 17 November 2009.

3Scope and objectives

3.1These practice rules setting out a code of professional conduct and client care have been prepared by the Real Estate Agents Authority (the Authority). They constitute the Professional Conduct and Client Care Rules required by section 14 of the Real Estate Agents Act 2008.

3.2These practice rules set out the standard of conduct and client care that agents, branch managers or salespersons (collectively referred to as licensees) are required to meet when carrying out real estate agency work and dealing with clients.

3.3These practice rules are not an exhaustive statement of the conduct expected of licensees. They set minimum standards that licensees must observe and are a reference point for discipline. A charge of misconduct or unsatisfactory conduct may be brought and dealt with despite the charge not being based on a breach of any specific rule.

3.4These practice rules must be read in conjunction with the Act and regulations, and do not repeat duties and obligations that are included in the Act or regulations.

4Interpretation

customer means a person who is a buyer or potential buyer of land or a business, and who is not a client as defined under section 4 of the Act

prospective client means a person who is considering or intending to enter into an agency agreement with an agent to carry out real estate agency work.

4.2Unless the context otherwise requires, terms used in these rules have the same meaning as in the Act.

5Standards of professional competence

5.1A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

5.2A licensee must have a sound knowledge of the Act, regulations made pursuant to the Act, rules issued by the Authority (including these rules) and other legislation relevant to real estate agency work.

6Standards of professional conduct

6.1An agent must comply with the fiduciary obligations to his or her client arising as an agent.

6.2A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.3A licensee must not engage in any conduct likely to bring the industry into disrepute.

6.4A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client.

6.5A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely, on the basis of the licensee’s knowledge and experience of the real estate market,1 that land may be subject to hidden or underlying defects, the licensee must either—

(a)obtain confirmation from the client that the land in question is not subject to defect; or

(b)ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.

6.6A licensee must not continue to act for a client who directs that information of the type referred to in rule 6.5 be withheld.

7Duty to report misconduct or unsatisfactory conduct

7.1A licensee who has reasonable grounds to suspect that another licensee has been guilty of unsatisfactory conduct2 may make a report to the Authority.

7.2A licensee who has reasonable grounds to suspect that another licensee has been guilty of misconduct3 must make a report to the Authority.

7.3A licensee must not use, or threaten to use, the complaints or disciplinary process for an improper purpose.

7.4If a licensee learns that a person is committing an offence by undertaking real estate agency work without a licence, the licensee must immediately report the matter to the Authority.

8Awareness of duties and obligations on agents to create awareness of Act, regulations, and rules

8.1An agent who is operating as a business must display these rules prominently in the public area of each office or branch, and provide access to it on every website maintained by the agent for the purposes of the business.

8.2A licensee must make these rules available to any person on request.

8.3An agent who is operating as a business must ensure that licensees engaged or employed by the agent are familiar with the Act and other legislation relevant to real estate agency work, associated regulations, and any rules made by the Authority, including these rules.

8.4An agent who is operating as a business must ensure that licensees engaged or employed by the agent are aware of and have the opportunity to undertake any continuing education required by the Authority.

9Client care and dealings with customers

General

9.1A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to law.

9.2A licensee must not engage in any conduct that would put a client, prospective client or customer under undue or unfair pressure.

9.3A licensee must not take advantage of a client’s, prospective client’s or customer’s inability to understand relevant documents, where such inability is reasonably apparent.

9.4A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interest.

Appraisals and pricing

9.5An appraisal of land or a business must be provided in writing to a client by a licensee; must realistically reflect current market conditions; and must be supported by comparable information on sales of similar land in similar locations or businesses.

9.6An advertised price must clearly reflect the pricing expectations agreed with the client.

9.7A licensee must not mislead customers as to the price expectations of the client.

Agency agreements and contractual documents

9.8When inviting signature of an agency agreement a licensee must explain to a prospective client in writing—

(a)the conditions under which commission must be paid and how commission is calculated, including an estimated cost (actual $ amount) of commission payable by the client, based on the appraised price of the land or business:

(b)how the land or business will be marketed and advertised, including any additional expenses that such advertising and marketing will incur: it must be explained to the prospective client that he or she is not obliged to agree to such additional expenses:

(c)that further information on agency agreements and contractual documents is available from the Authority and how to access this information.

9.9When inviting signature of an agency agreement or a sale and purchase agreement, or other contractual document, a licensee must ensure that a prospective client, client, and/or customer is aware that he or she can, and may need to, seek legal, technical, or other advice and information, and allow the prospective client, client, and/or customer a reasonable opportunity to do so.

9.10A licensee must not submit an agency agreement or a sale and purchase agreement or other contractual document to any person for signature unless all material particulars have been inserted into or attached to the document.

9.11A licensee must not invite a prospective client to sign a sole agency agreement without informing the prospective client that if he or she enters into or has already entered into other agency agreements, he or she could be liable to pay full commission to more than 1 agent in the event that a transaction is concluded.

9.12An agent must not impose conditions on a client through an agency agreement that are not reasonably necessary to protect the interests of the agent.

9.13A licensee must submit to the client all offers concerning the sale, purchase, or other disposal of any land or business, provided that such offers are in writing.

9.14A licensee must retain copies of all offers (whether such offers resulted in a transaction or not) for a period of 12 months.

Advertising and marketing

9.15Unless authorised by a client, through an agency agreement, a licensee must not offer or market any land or business, including by putting details on any website or by placing a sign on the property.

9.16A licensee must not advertise any land or business on terms that are different from those authorised by the client.

9.17When authorised by a client to incur expenses, a licensee must seek to obtain the best value for the client.

9.18A licensee must take due care to ensure the security of the land or business and avoid risks of damage that may arise from customer access to the land or business.

Conflicts of interest

9.19A licensee must not act in a capacity that would attract a commission from both a client and customer in the same transaction.

9.20A licensee must not engage in business or professional activity other than real estate agency work where the business or activity would, or could reasonably be expected to, compromise the discharge of the licensee’s obligations.

Confidentiality

9.21A licensee must not disclose confidential personal information relating to a client, unless—

(a)the client consents in writing; or

(b)the licensee is required by law to disclose the information; or

(c)disclosure is necessary to answer or defend any complaint, claim, allegation, or proceedings against the licensee by the client.

9.22Where a licensee discloses information under rule 9.21(b) or (c), it may be only to the appropriate person or entity and only to the extent necessary for the permitted purpose.

9.23A licensee must not use information that is confidential to a client, for the benefit of any other person or of the licensee.

10Information about complaints

10.1An agent must ensure that there are written in-house procedures for dealing with complaints and dispute resolution.

10.2A licensee must ensure that prospective clients and customers are aware of these procedures before they enter into any contractual agreements.

10.3A licensee must also ensure that prospective clients, clients, and customers are aware that they may access the Authority’s complaints process without first using the in-house procedures; and that any use of the in-house procedures does not preclude their making a complaint to the Authority.

10.4A licensee employed or engaged by an agent must advise the agent within 10 working days of becoming aware of—

(a)any complaint made to the Authority against them, the decision of the Complaints Assessment Committee made in respect of that complaint, and any order made by the Committee in respect of that complaint; and

(b)if the matter proceeds to the Tribunal, then the decision of the Tribunal in respect of the matter, and any order made by the Tribunal in respect of the matter.

Dated at Wellington this 12th day of October 2009.

The Common Seal of the Real Estate Agents Authority was affixed in the presence of:

[Seal]

Kristy McDonald,Chair.

Peter McDermott,Board member.

Explanatory note

This note is not part of the rules, but is intended to indicate their general effect.

These rules, which come into force on 17 November 2009, set out the standard of conduct and client care that agents, branch managers, or salespersons are required to meet when carrying out real estate agency work.

Contents

4Changes made under section 17C of the Acts and Regulations Publication Act 1989

5List of amendments incorporated in this reprint (most recent first)

Notes

1General

This is a reprint of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009. The reprint incorporates all the amendments to the rules as at 8 April 2013, as specified in the list of amendments at the end of these notes.

Relevant provisions of any amending enactments that contain transitional, savings, or application provisions that cannot be compiled in the reprint are also included, after the principal enactment, in chronological order. For more information, seehttp://www.pco.parliament.govt.nz/reprints/.

2Status of reprints

Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment. This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.

This presumption may be rebutted by producing the official volumes of statutes or statutory regulations in which the principal enactment and its amendments are contained.

3How reprints are prepared

A number of editorial conventions are followed in the preparation of reprints. For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted. For a detailed list of the editorial conventions, seehttp://www.pco.parliament.govt.nz/editorial-conventions/ or Part 8 of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force.

4Changes made under section 17C of the Acts and Regulations Publication Act 1989

Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice. Changes that would alter the effect of the legislation are not permitted.

A new format of legislation was introduced on 1 January 2000. Changes to legislative drafting style have also been made since 1997, and are ongoing. To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all legislation reprinted after 1 January 2000 is in the new format for legislation and reflects current drafting practice at the time of the reprint.

In outline, the editorial changes made in reprints under the authority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint:

•omission of unnecessary referential words (such as “of this section” and “of this Act”)

•typeface and type size (Times Roman, generally in 11.5 point)

•layout of provisions, including:

•indentation

•position of section headings (eg, the number and heading now appear above the section)

•format of definitions (eg, the defined term now appears in bold type, without quotation marks)

•format of dates (eg, a date formerly expressed as “the 1st day of January 1999” is now expressed as “1 January 1999”)

•position of the date of assent (it now appears on the front page of each Act)

•punctuation (eg, colons are not used after definitions)

•Parts numbered with roman numerals are replaced with arabic numerals, and all cross-references are changed accordingly

•case and appearance of letters and words, including:

•format of headings (eg, headings where each word formerly appeared with an initial capital letter followed by small capital letters are amended so that the heading appears in bold, with only the first word (and any proper nouns) appearing with an initial capital letter)

•small capital letters in section and subsection references are now capital letters

•schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross-references are changed accordingly

•running heads (the information that appears at the top of each page)

•format of two-column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chronological).

5List of amendments incorporated in this reprint (most recent first)

1For example, houses built within a particular period of time, and of particular materials, are or may be at risk of weathertightness problems. A licensee could reasonably be expected to know of this risk (whether or not a seller directly discloses any weathertightness problems). While a customer is expected to inquire into risks regarding a property and to undertake the necessary inspections and seek advice, the licensee must not simply rely on caveat emptor. This example is provided by way of guidance only and does not limit the range of issues to be taken into account under rule 6.4.